After U.S. markets closed on Monday, Stitch Fix reported a wider-than-expected loss per share and revenue that beat low expectations. Revenue was down 22% year over year. It got worse. The company issued downside revenue guidance for the current quarter and downside revenue guidance for the full year. New CEO Matt Baer outlined a cost-saving program and committed to emphasizing profitability. Shares traded up about 3.5% shortly after Tuesday’s opening bell.
General Mills is on deck to report quarterly earnings before markets open on Wednesday.
Here are previews of three companies scheduled to report earnings late Wednesday or early Thursday morning.
Darden Restaurants
Darden Restaurants Inc. (NYSE: DRI), the owner and operator of more than 1,800 restaurant locations, including Olive Garden and Longhorn Steakhouse, has added 15% to its share price over the past 12 months. Since reporting fiscal fourth-quarter results in June, Darden’s stock price has dropped by about 7.4%. As a value play, however, Darden’s generous dividend and solid payout ratio attract investors looking for consistent income. The company reports quarterly results early Thursday.
Of 30 analysts covering the stock, 19 have a Buy or Strong Buy rating and another 11 have rated it at Hold. At a recent share price of around $149.00, the implied upside to a median price target of $175.00 is 17.4%. At the high price target of $188.00, the upside potential is 26.2%.
Fiscal first-quarter revenue is forecast at $2.71 billion, which would be down 2.2% sequentially but up 10.6% year over year. Adjusted EPS are forecast at $1.74, down 33.1% sequentially and 13.7% higher year over year. For the full 2024 fiscal year that ends in May, estimates call for EPS of $8.76, up 10.5%, on sales of $11.57 billion, up 10.3%.
Darden stock trades at 17.0 times expected 2024 EPS, 15.4 times estimated 2025 earnings of $9.68 and 14.2 times estimated 2026 earnings of $10.49 per share. Its 52-week trading range is $120.20 to $173.06. Darden pays an annual dividend of $5.24 (yield of 3.45%). Total shareholder return for the past year was 18.87%.
FedEx
For the year to date, shares of FedEx Corp. (NYSE: FDX) are up nearly 55%. Since posting a 52-week high in late July, however, the stock has dropped by about 7.4%, largely due to an announcement from Amazon that the e-commerce giant was restarting its Amazon Shipping service after suspending it during the pandemic.
Amazon accounted for more than a fifth of FedEx’s revenue last year. Analysts have set a low bar for the company’s first-quarter revenue but expect to see a year-over-year increase in profit. FedEx reports results late Wednesday.
Analysts are somewhat bullish on the stock. Of 32 brokerages covering it, 13 have a Hold rating and 18 have a Buy or Strong Buy rating. At a share price of around $249.00, the upside potential based on a median price target of $275.50 is 10.6%. At the high price target of $312.00, the upside potential is 25.3%.
The consensus fiscal first-quarter revenue estimate is $21.84 billion, down 0.4% sequentially and by 6.0% year over year. Adjusted EPS are forecast at $3.77, down 23.7% sequentially but up 9.6% year over year. For the full 2024 fiscal year ending next May, analysts expect EPS of $17.69, up 18.2%, on sales of $90.03 billion, down 0.1%.
FedEx stock trades at 14.1 times expected 2024 EPS, 11.3 times estimated 2025 earnings of $22.06 and 9.9 times estimated 2026 earnings of $25.19 per share. The 52-week trading range is $141.92 to $270.95. FedEx pays an annual dividend of $4.82 (yield of 1.93%). Total shareholder return for the past year was 58.40%.
KB Home
Homebuilder KB Home (NYSE: KBH) posted its 52-week low last September, and the share price has increased by about 70%. Since posting a 52-week high in mid-July, however, the share price has dropped by 12.7%. The company reports quarterly results after Wednesday’s closing bell.
The homebuilder has profited from homeowners staying put in their homes and mortgages of less than 4% forcing buyers to look at new homes. As someone once said, however, if something cannot last forever, it will not. Analysts have not expected much in the past couple of quarters, and that is exactly what KB delivered.
Of 15 analysts covering the stock, six have a Buy or Strong Buy rating and eight more have Hold ratings. At a share price of around $48.00, the implied gain based on a median price target of $61.00 is 27.1%. At the high price target of $65.00, the upside potential is 35.4%.
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